Walgreen says Express Scripts scrap hurt November sales

(AP) — Walgreen Co. said Monday that sales at its drugstores improved in November, but its dispute with pharmacy benefits manager Express Scripts Inc. took a bigger chunk out of its revenue.

The largest drugstore operator in the U.S. said its total sales grew 4.2 percent to $6.09 billion in November. Revenue at stores open at least a year grew 1.8 percent. That figure is considered a key measurement of retailer performance because it leaves out results from stores that have opened or closed in the last year.

At stores open at least a year, Deerfield-based Walgreen said its pharmacy revenue grew 1.2 percent and prescriptions increased 0.6 percent. The company said its impending split with Express Scripts reduced its revenue at stores open at least a year by 1.1 percent, up from a 0.6 percent hit in October.

Sales of non-pharmacy items like household goods, food, and cosmetics grew 2.7 percent. The company said fewer customers came to those stores, but shoppers spent 3 percent more money per trip.

Walgreen said its sales were also hurt by this year's mild flu season. It gave fewer flu shots and the lower incidence of the flu hurt sales of flu and cold treatments.

Express Scripts pays drugstores like Walgreen to fill prescriptions. However, the companies have said they will stop doing business together after the end of 2011, when their current contract expires, because they can't agree on how much Walgreen should be paid. After the contract ends, most people whose prescription drug benefits are handled by Express Scripts will not be able to fill their prescriptions at Walgreen stores.

Walgreen has said it expects only a small decrease in prescription volume after the Express Scripts contract ends, but analysts expect a big decrease in prescriptions, front-end sales and overall profit. The company gets billions of dollars in annual revenue from its relationship with Express Scripts.

The company said its total prescriptions grew 1.5 percent in November and pharmacy revenue increased 3.4 percent. Front-end revenue rose 4 percent.

Pharmacy revenue from stores open at least a year rose 1.2 percent and front end revenue grew 2.7 percent.

Walgreen said it has administered 5 million flu shots this year, down from 5.4 million at this time in 2010.

The company opened 31 stores in November and acquired one. That gave Walgreen 7,811 stores in all 50 states; Washington, D.C.; and Puerto Rico, up 161 from a year ago. The company also runs more than 400 worksite health centers, home health care facilities, and specialty and mail-order pharmacies.

Nov. 30 was the end of Walgreen's fiscal first quarter. The company said its total drugstore revenue rose 4.7 percent to $18.16 billion. Revenue at stores open at least a year grew 2.5 percent, as pharmacy revenue picked up 2.4 percent and front-end revenue rose 2.5 percent.

Analysts expect Walgreen to report $18.27 billion in total revenue in the first quarter, according to FactSet.

Walgreen shares gained 99 cents, or 3 percent, to $34.11 as the markets moved higher in morning trading.